Owners of Samsung’s “smart” TVs are now reporting that streaming apps running on the TVs are inserting Pepsi ads into user-owned content stored locally on their PCs and NAS drives. In nearly identical stories, GigaOm and Ars Technica report that this happens for Plex and Foxtel apps running on the TVs.

In addition to the obvious privacy implications, this renders visible a new category in the monetization field: legalized theft of intellectual property.

If you recall the arguments around web search, framing and deep linking, the damage claims arose from money made on the value of the content by people who did not own the content and without permission of the content owners. It was, according to various legal arguments, theft of intellectual property rights, conversion, dilution of the market, etc.

In this case, Samsung is monetizing content you stream locally without regard to who owns the content. There is every reason to believe the content is yours since every smart phone made today takes movies. It’s a point of pride for Samsung who tout their high quality cameras and sensors made to do exactly that. Samsung unquestionably understands the concept of user-generated content and the high probability that the content into which they are inserting commercials is home movies of your cat(s), your kid(s), someone’s birthday party, or your vacation. Maybe you are showing home movies of your recently departed loved one at the wake and suddenly Samsung inserts the Pepsi commercial. (One only hopes it is at least the “Pepsi brings you back alive” campaign from years past.)

The point is, Samsung has no way of knowing anything about the content or the context, only that you find it interesting enough to watch therefore it is valuable enough to monetize, and Samsung believes they have the right to do so.

Because they manufactured the display.

I realize suggesting that Samsung believes they have a right to impose these ads on you may sound a bit hyperbolic, so let’s look at their Privacy Policy–AdHub Supplement:

When you use a Samsung service that includes ads provided by AdHub, AdHub receives certain information about your device. This information may include the device’s hardware model, IMEI number and other unique device identifiers, MAC address, IP address, operating system version, and settings.

In addition, the first time you visit a service that displays ads by AdHub, Ad Hub will assign your device a random ID number, which will be sent back to AdHub each time your device gets a new ad from AdHub.

When AdHub displays an ad to you, AdHub logs the fact that your device received that ad, as well as the webpage or other place where you viewed it.

This leaves no doubt that Samsung is assigning unique tracking IDs to each device capable of rendering content and ads. In order to access the features of the phone, tablet, smart TV or whatever, you are required to have a Samsung account. This attaches your personally identifiable data to each Samsung smart device and correlates those devices under a single umbrella account. Everything that is trackable on the devices is personally identifiable back to the device owners.

Whether or not you trust Samsung as custodian of your private data, the real question is how much you trust the advertisers and publishers that Samsung invites into your device through their AdHub. Though Samsung doesn’t share with them the information collected by Samsung, they do something even better. Samsung gives these third parties direct access to your device, tells you up front that your data will be collected by these third parties, then disclaims any responsibility for what those third parties might do with that privileged access. Samsung remains cozily wrapped within a cloak of anonymity and a blanket liability shield:

Third-party advertisers may use web beacons in their ads in order to collect information about users who view their ads, including through cookies, beacons and similar technologies. Samsung does not control the data collection and use practices of these companies.

Samsung next states their right – there’s that word again – to impose these terms on you. The last part of the policy supplement states that “you can opt out of receiving targeted advertising from AdHub” but notes that that if you do “you will continue to see ads, but they may be less relevant to you because they will not be based on your interests.” In other words, haven’t opted out of any of this data collection, only whether it is used to deliver targeted ads. Everything upstream of that, including the personally identifiable data collection and all the various uses to which that may be put, both by Samsung and it’s army of anonymous advertisers, is protected under the contract. Should you choose to operate the device without registering it to a Samsung account, the piece that makes your use of the device personally identifiable and provides the context of all your other devices, you don’t get to use the features for which you purchased the device.

Let’s be real clear about this. You unquestionably own all rights to content that you create, including the right to monetize that content or to make the choice to not monetize it. You are watching the content in the privacy of your own home. It is running over cables, switches, routers and NAS devices that you personally own. You are the one paying for the electricity and bandwidth. But if the smart device on which you render the content bears a Samsung nameplate, they can force you to watch ads as a prerequisite to render that content, whether you like it or not. Not only is Samsung monetizing your content, they are monetizing your viewing of your content.

Whatever we may think of this, we need to be asking what’s next? Will Motorola, Linksys and Netgear claim a right to insert ads into your privately owned, user-created, streamed content because they manufactured the cable modem, switch and router, respectively? Will Western Digital, Buffalo, or Synology claim a right to insert their ads into your privately owned streamed content because they made the NAS drive?

All of these “smart” components are in the path between where your content is stored and where it is displayed. All are essential for the content streaming to work. All have the processing capacity to insert ads into your content, and all come with Terms of Service and Privacy Policies that you agreed to sight unseen. Samsung may render the content but there is no content to render without all of these other components. Samsung was merely the first to stake their claim but every device in the chain has no better or worse standing to claim a right to insert ads into your streamed content than does Samsung. Do you believe none of them will assert that right once Samsung establishes it? What, exactly, do you believe will stop them?

Let’s do the chess thing and think ahead a move or two. What happens if someone figures out how to disable the ads and distributes a root kit or firmware patch? If that qualifies as anti-circumvention under the DMCA it would be a felony. Will we not have the right to root our TV, just like we do/don’t have the right to root our phone? What happens if a downstream device like the TV happens to interrupt the stream right in the middle of the ad being inserted by an upstream device like the switch or NAS drive? Will Linksys start charging Samsung and Synology for access to your in-home network, the same way that ISPs want to charge Netflix, Amazon and Hulu for bandwidth that has already been paid for at both ends? Because if you are not the ultimate arbiter of what happens on your private home network, then it is up to the courts and corporations to say what happens there.

Let’s think another chess move ahead. US law sets a pretty high bar before law enforcement officers can invade the sanctity of your home. True, these are greatly eroded lately, but your home is where you enjoy the most privacy protection against being recorded in video or audio, and physically searched. But if your TV, phone, game console, robots, toys, appliances, baby monitors and security systems are all live-streaming to corporate entities, law enforcement no longer have to clear that high hurdle. Most companies, especially small start-ups, won’t stand up to government information requests. Do you worry that “this call may be recorded for quality assurance”? Now everything you say in your living room, bedroom, bathroom, car, and your side of every phone call will be recorded for quality assurance and delivered to law enforcement during discovery, even if you aren’t the target of the investigation. You will have more privacy in your front yard than in your own home.

None of these scenarios are all that farfetched in a world where manufacturing a device confers the right to mediate the content transmitted or rendered on that device in a private setting. We consumers don’t read the contracts to which we are bound when we buy these devices and it doesn’t seem likely we’ll start any time soon. We keep buying the devices despite frequent news stories detailing ever more invasive privacy invasions and it doesn’t seem likely we’ll stop buying them any time soon, either. These practices generate net-new revenue for the device manufacturers so, short of them stepping on one another, there’s no chance they will stop voluntarily any time soon or, for that matter, ever.

When you can be forced to watch an ad before viewing content you personally created, there is no neutral, no middle ground, no shred of privacy left to give up that isn’t already being taken from you without your consent. The only options left are to accept the commoditization of our intimate lives, or else to actively protest and demand regulatory protection of our privacy rights and strong enforcement.

If you believe that there is anything at all in the world to which you have a right of privacy, this moment in our time is the last chance you will ever have to demand it before the window of opportunity slams shut and you are rendered effectively naked in the panopticon of life. Anything short of active opposition now is acquiescence. We need to be angry and we need to hold our elected officials accountable to represent our interests for once. Unfortunately, it doesn’t seem likely we’ll start doing that any time soon, either.

It was nice of Chris Cox to post an explanation of Facebook’s name policy and apologize to “the affected community of drag queens, drag kings, transgender, and extensive community of our friends, neighbors, and members of the LGBT community for the hardship that we’ve put you through in dealing with your Facebook accounts over the past few weeks.”

Except that the post doesn’t honestly explain Facebook’s name policy. The real purpose of the policy is to force you to use a name on Facebook that can be matched to the name you use to make transactions – such as the one on your credit card – so they can correlate the ads you’ve been shown to purchases you make in the real world and charge the advertiser more money. This is why in the old wording of the policy they asked for the same documents they match against – driver license, credit card, etc.

Over at the Cloud Ramblings blog, John Mathon provides his list of Breakout MegaTrends that will explode in 2015. There’s an entry in there about Personal Cloud rising to prominence. Yay! John and I often see eye to eye on our visions of the near future of computing and Personal Cloud is definitely huge in that future. But it seems that once you get past the name “Personal Cloud,” our visions begin to diverge. I’d like to explain how they diverge, why my vision is better, and beseech John and all the other pundits, analysts and trade journalists out there to adopt a slightly stricter interpretation of what, exactly, constitutes “personal.”

There’s a fundamental disconnect in the discussion about online privacy. We are told that people don’t care about their online privacy. Evidence of people not reading terms of service, blindly accepting all permissions on their apps, and even filling out detailed questionnaires in return for an actual cookie, seem to support this position. But in the aftermath of a breach, or simply a news story pointing out how invasive the Facebook Messenger permissions are, the reaction implies a strong expectation of better privacy. It is as if people have an expectation of privacy but a contradictory expectation of not being required to do anything to get it. These two things seem mutually exclusive and yet they exist simultaneously. How can that be? As with most mysteries of the universe, the answer involves some physics.

Today’s news from Net-Security.org is that newly discovered malware was found on Google’s ad network and its purpose is to hijack your router’s DNS settings causing all devices behind your firewall to use poisoned DNS resolvers. That means even if *you* run NoScript, AdBlockPlus, HTTPS Everywhere, Ghostery, anti virus and avoid sketchy sites, a visitor on your guest network or even some anonymous neighbor leaching off your wireless signal can compromise your router.

If all my ads were not so personalized and relevant, I’d be upset about this. But it’s SO worth it, right?

The funny thing is that the attackers have FAR more privileged access to your device and your data than do the malvertisers and yet so far they just want to take over your device and empty your bank account. If the attackers ever decide to go after your *data* they’ll not only find out your daughter is pregnant before you do, they’ll make her pay $100 to not tell you about it. Then you get an email asking what your conservative employer might think of your risque purchase history. They clean out your bank account and ruin you, it’s a 1-time profit. But if they blackmail you with your data they get a long-term income stream. They get a pension fund. Forget about calf-cow relationships. Start thinking ant-aphid.

But we’re good because there are lines – somewhere – that even creepy, invasive, malvertising adtech won’t cross and that will stop the spread of cybercrime over advertising infrastructure. Right? We’re good because the adtech industry is hard at work distancing themselves from organized crime and building security, accountability and user choice into the advertising system.

“Wake up T.Rob, you’re daydreaming again!”

Oh, right. I live in Bizarro World where adtech doesn’t acknowledge any responsibility for building the rails malware rides in on. They would side with us in our battle against against organized cybercrime, except they are too busy making advertising even more invasive: Targeted Online Marketing Got Creepier Again!

Note the exclamation point at the end. Almost seems like the author is excited about this in a good way. In fact, that’s the case.

So if you think of it – yes, it is very creepy. It goes to the extent that marketers will start knowing more about you than you do yourself.

But on the other hand we think it’s a great step forward. First of all it means that marketers are interested in finding out what we want to be offered. They are actually listening to us. Secondly this also means more targeted communications. Instead of being bombarded with advertisements you have zero interest in, you may find that eventually you start enjoy advertising as it fits seamlessly into what you are looking for.

But the Adtech folks aren’t stopping with impressively better tech, they are hitting new efficiency levels as well, as noted in Obama-Grade Ad Tech Coming to a Local Campaign Near You. “It’s been a challenge for even mid-range campaigns to be able to afford these online advertising capabilities. Today, it doesn’t matter if you’re running for city council or congress, because now you can reach voters in one of the most effective ways possible regardless of your campaign budget.”

Most traditional digital tracking and measurement only works as long as a consumer sits in front of a browser. What happens when they disconnect? A new breed of technologies helps extend scalable insight into consumer behaviors beyond the screen. From RFID to Wifi to optical tracking, this panel will discuss methods that identify consumer behaviors, help test and ultimately measure.

If you want to know what consumers pushing signals looks like, go talk to the folks at Customer Commons, whose QR-coded badges broadcast the intention to not be tracked in exactly these ways. Does your optical tracker honor these signals? I’m guessing not.

If you want to know what consumers pushing signals looks like, talk to the Respect Network who are building a platform specifically to exchange user-generated signal with marketers and businesses.

If you want to know what consumers pushing signals looks like, talk to me or my colleagues at Qredo who are building out the world’s first and best fully-encrypted, end-to-end communications and Personal Cloud platform that is mutually authenticated at the endpoints and yet the data and metadata are completely anonymous in the cloud servers. We’re all about quality signal.

Most of all, if you want to know what consumers pushing signals looks like, read The Intention Economy. Here’s a hint: when we customers push signals, it’s intentional, deliberate, and we like you for receiving them. If you have to hunt for the signal, if we don’t like that you received it, if stealth is involved, if it feels at all creepy to any of the participants, it probably isn’t being pushed.

I’m not going to reach anyone who honestly believes that signals received over passive RFID scans, Wifi hotspot scanning, and optical recognition tracking are being “pushed” by consumers. However, there must be some marketing and advertising people who realize how incredibly wrong that characterization is and why. To those people I plead: please side with the consumers against organized cybercrime. Quit acting as the R&D arm of cybercrime who watch you lay the tracks, then ride them direct to your audience, poisoning the well for all involved.

We are on the verge of computerizing the consumer side of commerce. When we computerized the supply side 30 or so years ago, it transformed the world. But the consumer side is much larger and the transformation potentially that much richer. Consumers want to build systems that send you signal. Stop trying to sneak in and steal it and just partner with us. Once we have some trust and accountability between us, organized cybercrime will have to do their own R&D. And if you are wondering how to make those connections you’re in luck. The next Internet Identity Workshop is next week. The place is practically littered with common ground for us to meet on.

Marketers and advertisers, now you get to choose who you want to work with and for. The customers, entrepreneurs, and identity geeks in the VRM community at IIW? Or organized cybercrime? Choose wisely because you’re running out of Mulligans on these compromised ad networks.

A few hours ago, Marketing Week published an article in their Trends section titled Smart Homes Lack Consumer Connection. Although I’m an eager proponent of Internet of Things, I don’t find much insight or any actionable conclusions here for a number of reasons that I’ll explain below. Do you find it insightful or helpful? Does your answer change after you read this post?

What, no privacy concerns?

When it comes to people declining to install “smart” devices, the breakdown of their reasons as provided in the article is:

Apparently it is possible to drastically reduce the ranking of privacy concerns by distinguishing between “too intrusive” versus “data being collected and used inappropriately.” That’s quite a fine line to draw considering the lack of granularity in the other categories and instead of “Privacy – 39%” which would have trumped Complexity, we get two separate line items falling below everything else on the list except for “None of the Above”. On the one hand it’s great that the study authors found something nuanced to look at. On the other hand, gaaaaaaa!

What does “cost” mean here?

For example, a plethora of issues appear to be lumped into “cost.” We all know that “cost” really means “cost versus benefit” and the article fails to distinguish whether people actually like the devices on offer and in their current form – i.e. see the devices as as highly beneficial. Maybe respondents love the devices but lack the funds to buy them, in which case a plausible ROI demonstration is appropriate. A good example of this is 40 watt equivalent LED bulbs that used to cost $30 ~ $50. Now that they sell for < $10 they have gone mainstream.

That seems to be the direction the authors are going when discussing energy saving devices and use the phrase “save money” four times in the article. On the other hand, “cost” may mean it isn’t worth paying the price for the devices on offer because the additional benefits derived simply aren’t compelling. A good example of this was when there were no 100 watt equivalent LED bulbs or 3-way LED bulbs. You had to pay a lot more money for something that wasn’t as functional as before. Kinda like buying a “smart” bulb and then having to duct tape the wall switch to the On position and use your phone to control it, or having no control over a “smart” device when the Internet goes out. Too bad the study authors didn’t see the need to find any nuance here.

Relevance

This image embodies much of what’s wrong with IoT. Rather than replacing devices with functionally equivalent smart devices that provide enhancements, today’s IoT expects you to buy new types of devices, designs them as though you wish to feature them in your decor, and requires you to control everything over the phone.

Just as a raftload of sins are hidden under “cost” in the study, so too are they aggregated under “not considered important in my life.” Does that mean “not considered important enough to find a place to put this new device on display so my friends will know how cool I am” (see the Revolv hub photo in the article) or “because I’m a Luddite,” or something in between?

Notification

Every single person who enables the buzzer on the washer and dryer has indicated their desire for those devices to notify them. Everyone whose telephone is not set to mute, whose doorbell is operational, who use an alarm clock, who use a kitchen timer, have indicated a desire for notifications. It is impossible to argue that notifications themselves are unimportant, so what is it about these notifications that is not compelling or relevant? Perhaps it is because the notification destination is almost always the phone and that ambient notification devices are never used? Of course, use of ambient notification systems would require integrations to a wider variety of devices and Industry seems to be well aware that Internet of Things is not about that. No, the IoT is apparently about controlling, rather than enabling, all your device integrations. That may be significant part of the problem but you’d never know it from reading this study which never considers whether the prevailing device architecture is part of the problem. The article not only fails to provide any insight in this area, but it doesn’t seem to recognize that there’s any nuance to be found.

Actuation

The other side of smart devices is actuation. The primary time most of us wish for actuation is along the lines of “did I turn off the [insert name of device here] before I left the house?” We’ve had device-issued notifications forever, even to some extent remotely, but we have not had a lot of “smart” actuation before. For many people “not considered important in my life” probably means exactly what you’d think and what the article suggests: we haven’t had this capability up to now and we don’t generally sit around wishing we did.

But “not considered important in my life” could also mean that the functionality of the devices on offer is perceived as laughable. “You want me to replace a perfectly good wall switch with…my phone? BWAHAHAHAHAHA!” This is the group into which I fall. Admittedly this conclusion requires an informed and tech-savvy consumer. However, targeting the portion of the market who do not understand the problem with this creates an incentive and business model based on keeping them clueless, and which also happens to facilitate the device-as-data-collection-portal paradigm. Anyone but me have a problem with this approach? Anyone else believe that devices should first act like the analog thing they replace and then provide enhancements as a secondary function?

It is also possible that “not considered important in my life” means “the device on offer doesn’t have the integrations that would make it compelling and traps me in a walled garden making it unlikely I’ll ever get the desired integrations.” Call me crazy but when my deaf aunt comes to visit, I might actually want the doorbell, fire alarm, toaster, washer and dryer to talk to the house lighting so she can receive notifications just like everyone else in the home. Anyone else believe that all devices should have open APIs so that prosumers and integrators can build compelling functionality with the mesh? Or believe that a mesh of connectivity across all these unlike devices from different vendors needs to exist in order to realize the potential of IoT? Maybe doing that would make IoT more relevant to the average consumer. The study or authors, not sure which, or both, don’t seem to care how the “not important” category breaks out or whether the architecture is part of the reason people decline to buy. Too bad. We might have learned something by drilling into these issues.

Privacy – it’s in there

The one area in which the authors found some nuance was privacy concerns. It is unfortunate that the result of granularity in this category is to drastically understate the relevance of privacy in consumer minds as compared to the other categories. The effect is apparent in the summary that Marketing Week uses when referring to the article from elsewhere on the site: Consumers cite cost and lack of usefulness as barriers to adoption. No, they didn’t. If you combine both of the Privacy categories, there is a total of only 6 percentage points separating Cost (45%), Relevance (44%), and Privacy (39%). Complexity (23%), which is the next closest category, comes in a distant 12 points below Privacy. The concerns expressed seem to cluster around Cost, Relevance and Privacy as the barriers to adoption. Odd that privacy would get dropped like that.

Perhaps when your audience is an industry driven by the collection and analysis of consumer data, to suggest that consumers have significant privacy concerns is taboo. Or perhaps the researchers genuinely wanted to drill down in this area because it is important, created sub-categories for privacy, but that intention got lost in publication. Hard to say what is going on and since the usefulness of the conclusions varies so widely depending on how you read the intent here, any credence we each give the study will tend to align with our own confirmation bias. Anyone can interpret the results according to their own views and that, for me anyway, renders the results meaningless.

Does anyone other than me believe that devices should default to not sending data to the vendor and instead allow the device owner to optionally enable vendor access to the data based on receiving something of value in return? That model would not only significantly improve consumer perceptions of data collection and intrusion, it would actually contribute to consumer confidence in IoT privacy.

Spin doctoring

The article features an infographic, followed by this opening text.

I’m forced to make a lot of assumptions here because the study isn’t linked from the article and not accessible through Google search or anywhere else that I’ve found. Since we do not have access to the study or information about its origins, we have to work with what’s in front of us. Unfortunately, what’s in front of us doesn’t hold up well under close inspection.

Strangely, the first words in the article (at least those that aren’t a headline) are “The study, seen exclusively by Marketing Week, reveals…” To which study are they referring, and what do they mean by “seen exclusively by”?

Are they trying to imply that someone independently and spontaneously funded this research without Marketing Week’s involvement and then gave Marketing Week exclusive access to it? The headline mentions “new research,” a non-specific phrase which could be plural or singular and suggests no connection exists between the reporter and the news being reported. The rhetorical device of starting the article copy by back-referencing an unnamed but specific study from among all the available “new research”, and the passive construction using “seen exclusively by” combine to reinforce the suggestion that this is independent news reporting. So too do the references to “Source: Gekko” as the authors of the research.

If all that is true, then who commissioned the research? And how did it end up as a Marketing Week exclusive and with their branding all over it? Did Marketing Week vet the provenance of the study before publishing it? Or did they in fact commission it themselves? Why not just tell us the origins, scope and charter of the study or make it available, unless the intent is to deliberately put some spin on it?

To be fair, my suspicions of deliberate spin doctoring assume that the article was written by someone whose core competency is the use of English language in the art of persuasion, for example a marketing professional or experienced reporter in that field. Someone like that doesn’t end up with a product like this by accident. On the other hand, one could (some might say should) could give Marketing Week the benefit of the doubt and assume that the unusual rhetorical construction isn’t actually deliberate framing but rather a case of sloppy as hell writing and editing that managed to get past all the approvals required for a high-profile feature article. Hey, it could happen. Decide for yourself. Got a different interpretation? Let me know about it in the comments.

Personal conclusions

My issues with the methodology, the article’s interpretation of the results and the apparent framing lead me to conclude that there’s enough of an agenda showing through to distrust the whole thing. I would have much preferred if the authors had drilled deeper into the broad spectrum of reasons consumers give for not buying today’s IoT devices. There are very few devices on offer today that provide a combination of compelling functionality, an open API, operate when disconnected from the Internet, and integrate with anything. Any study today would therefore be constrained by consumer perceptions of the crippled proprietary devices we have now as being representative of the possibilities of IoT, and thus such a study would be marginally useful at best. But it would at least be more useful than the study presented.

The VRM email list is once again suffering a bout of name angst. There are many identity geeks on the list and an existential question of the extent to which identity flows from the name and vice versa so it’s always an interesting discussion, regardless of whether headway is made. I’m of the opinion that the name tends to define the thing and that this is in fact part of the problem with VRM up to now. It has become defined, to the point of being confined, by it’s own name.

One of the currently popular Internet memes poses the question of what would be most difficult about today’s society to explain to a time traveler from the 1950’s. The reply calls us all out on our frivolous use of the massive amount of computing power available to all of us. The sentiment mirrors my VRM Day presentation at IIW where I lamented that we could have built consumer-side apps to transform commerce but instead we created Angry Birds.

We’ve all heard that the the amount of computing power it took to support the manned moon missions is now available in a calculator, or we have at least heard some similar comparison. There is justifiable incredulity that computing power is now so cheap and plentiful that not only can we afford to squander it, but squandering it has become our very highest expression of that power.

Consider for a moment the example used in the meme to make the point. While the vision of putting that wasted capacity to work doing research is noble (I’m an enthusiastic supporter of World Community Grid), it seems rather uninspired. Basically, we should be looking at Wikipedia instead of lolcats, according to the meme. Despite that rather pedestrian example, the point is so compelling as to go viral. I wonder what impact it would have if there were an even better example of personal empowerment than Wikipedia.

You might rightly ask, as a friend recently did, “If consumer-side business apps are so compelling, how come nobody builds them the right way? How come nobody buys the ones we have, crappy though they might be?” Good questions, and ones I believe we know some of the answers to. I’ve identified two root causes.

Architecture

The biggest problem is the prevailing architecture. When we first applied computing to commerce on the vendor side, the hardware and software cost millions of dollars. Financing the systems was possible only by spreading the cost across very large customer populations. At the time, customer data was not inherently valuable, but rather was a byproduct of the system. When I worked as a computer operator for an insurance company in the 1980’s you may have had a decade-old policy but I guarantee we weren’t keeping all that data online. Data was expensive and we kept online only that which was required to conduct day-to-day business and we only archived that which was required to meet compliance obligations. If it wasn’t required for daily operations or compliance we destroyed it. Data was an expensive cost of doing business but it was less expensive than manual processing so it was tolerated as a necessary evil.

Eventually, the growth of computing power and shrinking cost of storage gave us the ability to analyze all that data and suddenly it was no longer an expense but a new source of profit. Companies found they had untapped gold mines in their vaults and set out to unblock all that value. But it wasn’t enough. Soon they began to tweak systems to proactively collect ever more data, from every possible point of interaction with the customer. Save it all, let SAS sort it out. Unfortunately, the moment in time when we collectively realized that data is valuable was also the moment when corporations had more of it than ever before and consumers had none. This locked in the proportions and model for distribution of data. Which is to say there is no distribution per se, just vendors with all your data and you with none. All variations on this model start from this default position.

The corporations have come to believe that consumer data is their birthright.

The result is that the discussion around consumer’s access to their own data is framed in terms of “releasing” it to consumers, but only subsets, under strict terms, and usually under tight constraints on what the consumer can do with it. The consumer is expected to be thankful for whatever access to their data they are granted. The corporation is, after all, doing the consumer a favor, right? (Say “yes” or we revoke your API key.)

In the absence of a better model, all new designs are based on businesses synthesizing new sources for ever more valuable consumer data. These include your browser, your phone, your car, and so on. But if you were to build out commercial software platforms from scratch in an environment with cheap, ubiquitous computing devices and high-quality open-source software, would this vendor-owns-all-data architecture even be possible? If you tried to build Amazon from scratch today and a competitor said “we’ll give you the same market place, the same inventory and the same prices, but we’ll also give you machine-readable copies of all transactional data” someone would build apps to capture and analyze all that data, the app builder would get rich, the competitor market vendor would get rich, the loyal customer would get functionality, and Amazon would be forced to also give you your data or go extinct. Unfortunately, Amazon achieved dominance without any competitive pressure to give you access to your own data, and so they don’t do that. The same is true of every other large vendor.

The premise of Vendor Relationship Management, or VRM, is that with access to their own data, consumers could apply computing power to problems of commerce and of managing their lives. We do this now to some extent, but we have a million different vendors holding our data and charging a million different subscriptions for the privilege. We can’t integrate across these silos and we are locked into specific vendors because the accumulated data is not portable. The vision of VRM is to consolidate all that data into a personal cloud. I may still buy a book from Amazon but my personal cloud lists that book in a collection that also includes books I purchased from my local independent bookstore.. Receipts for all these purchases are captured at the time of sale and loaded into my personal cloud without any manual intervention on my part. The same is true of all my other purchases, utility bills, mortgage or rent payment, car payment, etc. Having captured all this data, I can analyze my own family’s spending and consumption patterns over time. If the consumer-side analytics software is good enough, I might even discover that my daughter is pregnant before Target does.

So, the first big issue we need to overcome is the inertia present in the prevailing big-data, corporate silo architectures. In the absence of a viable competing architecture, corporations have little incentive to change, and why should they? That data is valuable and any accountant will tell you that giving away valuable, income-producing assets means less profit. Of course, it’s actually not a zero-sum game like a balance sheet. Digital data can be copied without diminishing the value of the original copy and if giving it away makes consumers more loyal then the result is more, not less, profit. Convincing data-hoarding corporations to exploit abundance rather than scarcity is the first step.

Cost/Benefit

The second problem is the cost/benefit equation. One of the reasons we look at lolcats and play Angry Birds is because these activities do not require constant vigilance of us. Just the opposite, in fact. Leisure pursuits have become the highest expression of computing power because they relieve us of the stress of daily life. We need software business tools that behave the same way. The lack of enthusiasm for the current and previous crops of Internet of Things “smart” devices and business software designed for lay persons is due in large part to the danger inherent in the usual implementations of these things.

Online banking, for example, requires of the user a much higher level of security hygiene than does Angry Birds. Worse, you mist practice this vigilance not just while signed onto the bank, but at all times when using a device that might someday be used to sign onto your bank. Online banking comes with the advertised functionality, but also incurs the cost of acquiring and practicing online safety habits. If the banking app is reasonably good the cost/benefit nets to the positive side but it can be a close call. On the other hand, it’s almost all upside and virtually no downside to seeing a cat not quite make that leap to the counter top. (The cat may beg to differ.)

One of the most important reasons today’s software is so unsecure is that all the incentives in the system reward lax security. If you spend $1M on security, your competitor who spends nothing is much more profitable, as reflected in their superior financial performance. In order to compete, you too must skimp on security. You’ll regret it if you suffer a breach but, despite the headlines, that’s actually a relatively rare event. Predictably, this drives a race to the bottom. Investment in software security is now mostly a post-breach phenomenon and eternal vigilance is your cost of online banking, or any other non-leisure activity that involves even a modest amount of personal risk.

A different sort of cost/benefit issue exists in so-called “smart” devices, the best (i.e. worst) example of which is lighting. The first requirement of any “smart” device is to act like the thing it replaces. What the first crop of device manufacturers failed to realize is that a bulb and a switch are different parts of the same system. You should therefore improve them as a system. Making either of these operate from your phone is cool, but not something you’d actually want to use – as the mechanical switch and dumb bulbs installed in your house today probably attest. What manufacturers like Philips and Belkin brought to market are a bunch of “smart” switches that operate dumb bulbs, and a bunch of “smart” bulbs which require you to duct tape the dumb wall switch to the ‘ON’ position. Nobody offers a smart bulb/switch set. After the novelty of controlling the light from the phone wears off many people decide “smart” devices are actually pretty stupid and then uninstall them. The requirements to use the phone handset to control the lights, of having to duct-tape the wall switch to the ‘ON’ position to make it all work, the loss of basic lighting control functionality when the Internet is down, combined with the extravagant retail price of the hardware, all add up to an operational cost which far outweighs the benefit of “smart” lighting.

But a truly smart switch is really the user interface to send a signal, and a truly smart bulb is a receiver and actuator of such signals. If the switch passes power through to the bulb at all times, if flipping it sends the required signal, and if the bulb then receives the signal and performs simple on/off actions, then the pair of devices can directly replace the equivalent dumb versions of a switch and bulb. Anyone who has ever operated a standard toggle switch and bulb will be able to operate this smart lighting system without any training or the need to whip out a phone. The truly smart lighting works without Internet connectivity because the signalling is all local, which means the device talks to you first rather than to the manufacturer. If you can replace the dumb switch and bulb with smart versions and cannot tell the difference in normal operation, then there is no incremental cost but considerable benefit in doing so.

Of course, such a system must be capable of local signaling which in turn implies you get the data before the device manufacturer. In fact, there’s a possibility you might block the data from getting back to the manufacturer and just keep it local if you know a bit about networking. The notion that you might be the first and only user of your own data is called personal sovereignty. Where I live in the United States, the Constitution was supposed to guarantee the sovereignty of citizens. The constitution never anticipated digital technology, though. Not only does the prevailing software architecture not recognize your sovereignty as the first owner of your own data, it is more accurate to say that your sovereignty is a direct and urgent threat to the prevailing architecture.

In the absence of personal clouds, consumers as first owners of their own data is unthinkable.
In the presence of personal clouds and cloud apps, consumers as first owners of their data is inevitable.

Think about that for a moment. Nearly all of the computing infrastructure on the planet is designed on the dual premises that 1) data is valuable; and 2) whoever builds the device or service has an absolute right to the data, even to the exclusion of the person to whom the data applies. So it’s my TV but LG’s data. It’s my home automation but it’s Insteon’s data. It’s my cart full of groceries, but even though I was there physically participating in the sale, it’s still the store’s data and only the store’s data.

Changing this situation is the reason for Personal Clouds. Putting all that spare computing power to better use will require all those vendors to provide not just an e-receipt, but specifically a machine-readable e-receipt, or an API that we can use to fetch our data on demand. The chicken-and-egg of this situation is that without apps, there is little demand to squirrel away our transaction data, and without a bunch of data there is little interest from developers. However, it only takes a few seeds to make an alternative architecture take off. It takes someone who believes enough to build the platform and trust that people, data and apps will come.

For example, imagine being the first grocery loyalty company to make the line-item purchase data available to consumers. The moment we have a basic app to display, search, and summarize line-item grocery data, that company will instantly become the most profitable loyalty program vendor on the planet. Other loyalty program vendors will wonder why they ever thought customer data was a zero-sum asset and they too will start giving it away just to remain viable. The more consumers take custody of their own data and extract value from it, the more value corporations will realize in sharing transaction data directly with the other transaction participants.

Similarly, in a world where consumers get to choose whether device data gets out of their home network and back the device vendor, devices that require a connection to the vendor to function will find few buyers and eventually end up on the discount rack at the back of the store. In that environment, device manufacturers will change their business model to provide value-added services, friendly dashboards and/or great analytics in order to earn the customer’s trust and a share of the data. They’ll need to give you a good reason to let it out because the cloud is by default private and it will take some affirmative action on your part before they see that data.

What’s next

The good news is that the only thing keeping us locked into the current architecture is inertia. There’s a lot of infrastructure built around what Doc Searls calls the calf-cow model but one or two good applications built on a new person-centric architecture can be the trickle that becomes a flood and eventually displaces the old model. I spent last week with a group of people dedicated to doing exactly that. The technology needed to build a person-centric platform has been around for a while. The only thing missing was someone with sufficient faith in the new business model to plug the pieces together with the controls facing the user and then trust the user to drive it. Because this threatens the existing model and potentially shakes up entire industries, there will be considerable push back. Those who benefit from the current system want to keep that calf-cow relationship in place. They want you to be wholly dependent on them for all your information needs, even information that you generate. They won’t like a new architecture in which you get to keep as private some of the data they now take for granted.

But we can’t keep walking around with the power of a 1980’s mainframe on our hip reserved exclusively for cartoon games and crazed cats. Even in the absence of some better alternative, we have this vague uneasiness and a bit of guilt that those wasted MIPs could have been put to good use. We want the Internet of Things but we want it to serve people. We want the Internet of People and Things. (Hence the name of my company, IoPT Consulting.) When we transact business, we want our own copy of that transaction automatically delivered to our personal cloud. We want applications to help us index, search, sort, summarize and analyze all our new-found data. And when we get all that, vendors clinging to the calf-cow model will have to get on board or get put out to pasture. Then that spare computing power will provide some real benefit beyond distracting us from the real world. We’ll use it to make the real world better.

This is the mission of the group I’m calling “The Santa Barbara Crew” until I’m out from under non-disclosure: providing serious, business-grade software, built on VRM principles, using personal clouds as the data store, with least possible risk and maximum benefit to users. This will transform commerce even more than it did when we computerized the vendors. The Internet of Things, if built correctly with people at the center, will transform the world more than commerce ever did. We (I say “we” because I’m participating in this project) plan to deliver all those things. It won’t be compromised based on what we think some or other vendor will or won’t accept. It’s designed based on what you or I would insist on if we were building out commercial IT infrastructure today from scratch. More importantly, it’s the thing I think you’d want to use if given the choice. Get ready because that choice is coming your way soon.

What will you do when that opportunity comes?
Will you remain a calf, forever stuck in the vendor’s pasture?
Or will you claim your own sovereign future?

My theory about the “going dark” problem is the opposite of the official government explanation. They claim that they need to be able to read the communications of bad actors. (“Bad actors” in the security sense here, not the Hollywood sense.) But the back doors they’ve engineered have more to do with weakening the keys than with breaking the algorithms. Mitigations are simple: introduce additional entropy while generating the key, use uncommonly long keys, use protocols with Perfect Forward Secrecy. Anyone serious about preventing eavesdropping can reasonably expect to do so with a bit of work.

If that’s true, then what’s the big deal about lots of ordinary people who are *not* surveillance targets also using encryption?